One More Count, Perhaps the Most Bullish of Them All, But Hear Me Out

As many of you already know, my primary $ES count is that we’re in a minor (green) 4 correction, hopefully either done or soon to be done. This is a goldilocks count, suggesting that we’re not going to crash, and that when the correction is over, we’ll move up again modestly to another 3 before correcting again. As many of you also know, I am perfectly willing to pivot to more aggressively bearish counts if I feel like the price action merits such a choice. I suggested some lower targets this morning here and here in case just such an event unfolds before us.

However, i can’t quite shake the feeling that something is off here. And I’ve decided to try to articulate that here to you in this article.

I want you to follow the mass psychology of a hypothetical outcome with me here. And afterwards, I will supply some additional reasons.

First, let’s review the minor (green) 4 count, which I’ve posted just below. The psychology here is that the majority of Elliotticians (professional ones included) believe we are in the orange 4 on the right, that is to say, a greater correction, one that will eventually approximate the size of the correction from last fall (and there are also many more who believe we have passed over an even more significant top). When I made that determination (that there was a consensus), I opted for this less bearish count because no one was really using it. So far, so good, you don’t want to have the exact same count as most of those who are also counting have. It’s a recipe for disaster.

Now, here’s the problem. We know what they are expecting here (a bigger oof), now what am I expecting here? I am expecting the correction to end soon or to have ended already, and for us to then advance to orange 3, then have that orange 4 correction. The problem is this: at what point will the others realize that the count they are using is a poor reflection of the price action? Answer: once we start rallying hard without having made a large structure like the one we made last fall.

And so then what will be their response? They’re going to adopt the count I’m using here: realizing that we just had a smaller 4 instead of a greater 4, they will expect a rally, followed then by the greater 4. And so you see the problem: suddenly, we will all be using the very same count, which is, as noted above, a recipe for disaster.

SPX

In the article I wrote a little while back here, I identified counts that I said were the “most reasonable count alternatives” available to us. It is also possible that we are facing a very unreasonable count. Now, while I did post a nested 1-2-1-2 pump alternative, I did not explore an even deeper nest, a 1-2-1-2-1-2 pump. I know, I know, but hear me out.

First, let me show you the count:

ES

Now, there’s something very peculiar about the depths of these corrections. They’re each coming down to same respective range each time. This helps us to deflect the deeper plunge targets I posted this morning. I posted the expected depth of a 2 of intermediate degree there, but no 2 of any degree so far has gone to its expected depth. In other words, if one were to challenge the suggestion that we’re completing a two here by saying, “Twos ought to go much deeper,” we have an inventory of twos behind us now that have not gone much deeper. And that is what one sees in very bullish markets.

Furthermore, I tend to think that sentiment here is much, much, much too bearish to allow for the deeper targets I suggested this morning. Almost everybody wants this market to die and so there is a very good chance on the basis of that alone that it will not die.

The AAII survey from last week (below) supports my own observations about the bearishness of sentiment here, and that was before today. This is very high. The highest it’s been all year, in fact. That often coincides with bottoms of great significance. I think it reduces the chances of us going up to an orange 3 of intermediate degree and then having a greater correction than the one we’re having now.

AAII

The historic low GEX print astonished me a little and gave me great pause, making me reexamine this very bullish count, which I also keep in mind, but don’t share often because it looks quite absurd. All-time forever low GEX:

GEX

If such a low GEX often coincides with significant lows in the market, what does the lowest GEX of all-time suggest? It’s not clear, but it could signal a very significant bottom.

And finally, I want to share a tweet from a man we should all listen to.

Macro Charts’ data is suggesting that a low of significance may be forming here:

And one of the things I find interesting is the strength of the pushback he’s getting on his data right now. People do not want to hear it.

I thought I was being contrarian last year by being bearish. I thought prices were rising so sharply because everyone bought the so-called “Fed Put” and were buying like crazy, being very bullish, and so I thought I was being on the outside trying to do the opposite. It took a great deal of reflection for me to realize that I was absolutely in the majority in my great bearishness. Now, I was able to free myself from that, but I am a professionally trained navel-gazer. My intellectual quest is to search for the truth in all things above all else, and I am equipped to some degree to conduct those inquires, but certainly not everyone is so equipped. And the more I look now, the more I’ve come to realize just how much people are completely out of their minds with their bearishness. And yes, prices are high, I understand that. But I think a lot of people are angry about it. And until all of that is gone, I doubt we’re going to see any major top and it may literally take years for that to happen.

I realize now that the only way an awkward, introverted man like me could have risen to fame on Twitter was on the basis of being extremely bearish alone. The bearishness in the market is going to hold it up for some time, I think.

The 1-2-1-2-1-2 count I presented above would send us significantly higher, and for a great deal of time, and I honestly think that that is where the pain trade is right now. If we go up a couple hundred points, people are just going to think that a bigger correction lies just ahead of us. The ridiculous count I’ve posted will take us to ~5500 just for the green 3, and that’s only if it reaches the expected extension. It’s free of course to go as high as it wants to. Also, what I think might astonish people if that count is the right count, is that we’ve now had three decent corrections: last fall, last March, and now. And in each case, we sold off 5-10%. But if those have been twos, then the fours don’t have to be anywhere near as deep. Twos are the deep corrections. We could end up going up, sideways, up, sideways, up sideways again and again and again, never letting anyone see corrections even of the magnitudes we’ve seen so far over the last year. I know, it’s insane even to consider it. And I will forget about it the moment things get too dicey more my liking. I just point it out to you so that you can know that it remains a live possibility.

I see a lot of long-term bullish structures in the market, and I’ve posted many of them on this website. And a count like would help to explain them.


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3 thoughts on “One More Count, Perhaps the Most Bullish of Them All, But Hear Me Out”

  1. Brilliant post.

    Would you agree that the current correction is of same type (zigzag) as previous 1-2 Is another counter argument against this being a 3-4? Alternation is quite common.

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